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April 19, 2013

Strategies to Improve CE Credit: More Is Better

More credits required means a bigger market for continuing-ed providers

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In the first part of our post, we suggested that in order to increase the quality of CFP continuing education standards, they should establish a better database, as well as a system to vet speakers. In the second part of the post, we look at increasing CE requirements to create a market for CFP CE providers.

Perhaps the single most important step to improving CFP CE providers and content in the long run, though, is that the Certified Financial Planner Board of Standards still needs to lift its requirements for the number of CFP CE credits that are required from year to year.

As you may recall, the CFP Board proposed last year to increase the CE requirement for 30 hours of CE credit every two years, up to 40 hours—a change that I supported simply on the basis that our continuing education requirement as practitioners is woefully below that of most other recognized professions, which is especially unfortunate given how broad and multidisciplinary the financial planning topic list really is. Unfortunately, though, the CFP Board ultimately declined to implement the CE change.

While the decision not to increase the CE requirement was unfortunate from the perspective of advancing the profession, it was also very unfortunate from the perspective of trying to improve the quality of CFP education. The reason is simply this: the more CE that is required, the more demand there is for CE credit, and therefore the more providers there are willing to enter the marketplace and try to craft quality CE credit.

Or, viewed another way, it's hard to see why many quality CE providers would try to grow a business providing CE credit when the bar is already so low for practitioners. For instance, with just under 70,000 CFP certificants required to get just 15 hours of CE per year, that means the entire marketplace is "only" about 1,000,000 hours of CE per year, much of which is already consumed by the hundreds of conferences that exist.

While that may sound like a large number, the reality is that if a quality CE provider for online content were to launch and managed to capture 2% of the entire marketplace, teaching all 15 hours of CE for 1,400 CFP certificants at a "reasonable" low-price online cost like $5 per CE credit hour (which by comparison is the going rate for volume online CE providers in the CPA space), the entire business would barely generate $100,000 of gross revenue. And that's before the cost of marketing, developing the educational platform, and actually creating the content!

The bottom line: there's just not enough opportunity for much business growth and innovation given the small size of the marketplace that results from the CFP Board's relatively low CE requirement.

Of course, this doesn't mean the CFP Board should just establish a higher CE requirement by fiat just to arbitrarily set the CE marketplace to a higher point; after all, more CE requirements, and their associated cost, indirectly become a cost drag (or even a quasi-tax) on practitioners, and that decision should not be taken lightly! But given that arguably the CFP CE requirement already needs to come up further to bring it in line with other professions, and that the current quality of CE is so low right now, perhaps higher CE requirements really do need a greater push, not just for the benefit of practitioners directly, but also to stimulate the educational marketplace to serve them.

After all, it's with no small bit of irony that one of the primary objections that came through from the CFP Board's comment period on the proposed increase of CE was that the content quality is already so low that practitioners didn't want to spend more time sitting through "useless" CE sessions (although notably, another complaint was that not all CE credit for CFP certification overlaps with other regulatory requirements, but that's a discussion for another day).

Yet it seems that we're now caught in a circular chicken-and-egg argument; the quality of CE won't improve until the marketplace is expanded with a larger CE hour requirement, but practitioners don't want the larger CE hour requirement until there's more quality content to fill it.

Arguably, the CFP Board could just start creating its own content to break the logjam, but the reality is that this only solves the problem of the underlying content, not the real problem of a lack of quality speakers and educators to deliver it (as anyone who's heard a speaker in the past deliver the CFP Board's canned Ethics content can attest!).

But perhaps having the CFP Board implement a speaker rating system and a clearinghouse for finding speakers and relevant CE providers, and subsequently increasing the requirement for CE hours as well, can support a broader marketplace for quality CE education and an better opportunity for good providers to succeed with the existing systems (online delivery, standalone conferences, association events, etc.), and keep the profession moving forward.